Start-up investors are cashing out in far less time than they did in the recent past, according to a recent study by Securities Data Co. The study tracked 623 companies that received expansion-stage financing (defined as second-stage, third-stage, or bridge financing) from venture capitalists and went public during the years 1983 to 1993. The amount of time it takes companies to go public after receiving expansion-stage venture capital is "definitely shrinking," notes Securities Data analyst Robert Liu, adding, "these findings are significant because they contradict the belief that venture capitalists are long-term investors." Liu attributes the shrinkage to the boom initial-public-offering market of the last three and a half years, with venture capitalists spotting "a window of opportunity and rushing to cash out" in a shorter period of time.
-- Alessandra Bianchi* * *
Average Number of Years It Takes Companies to Go Public After Receiving Expansion-Stage Venture-Capital Funds (Five-Year Average, 1989-1993)
Consumer-related products 2.2
Industrial products 2
Medical/health-related products and services 2
Computer-related products 2
Chips/electronic equipment 1.8
Other services/manufacturing 1.6
Energy .4* * *
The Big Picture: Total Average in Five-Year Periods
Source: Securities Data Co./Venture Economics.